FOOD FACTOR:

Why in the news?

Food inflation’s impact on personal consumption underscores economic challenges, requiring policy measures to ensure stability and growth.

source:imocsquad

About Impact of Inflation on Personal Consumption:

  • Retail inflation data highlights the ongoing impact of volatile food prices on broader inflation and personal consumption, a key driver of economic growth.
  • February’s Consumer Price Index (CPI) remained stable at 5.09%, but food price gains surged by 36 basis points to 8.66%, led by vegetables.
  • The potato-onion-tomato trio, a significant part of food consumption, witnessed substantial price hikes, posing challenges for consumers and policymakers alike.
What is the Consumer Price Index (CPI)?

●   Tracks the shift in retail prices of essential goods and services consumed by households nationwide.

●   Measures changes in the price level of a basket of consumer goods and services purchased by households.

●   Numerical estimation calculated using representative sample prices collected periodically.

Key Differences with Wholesale Price Index (WPI):

●   CPI captures changes in price level at the consumer level, while WPI tracks changes at the producer level.

●   CPI can include price changes of services, unlike WPI.

●   The Reserve Bank of India (RBI) uses CPI and WPI to calculate in